Virage Logic declares offer to acquire ARC International unconditional in all respects

FREMONT, USA: Virage Logic Corp. has declared its recommended cash offer to acquire publicly held ARC International plc, a leading provider of consumer IP to OEM and semiconductor companies globally, unconditional in all respects.

With 84.68 percent of the ARC shares already tendered into the offer, Virage Logic will proceed to consummate the purchase of this ownership interest in ARC and will have ARC immediately apply to the UK Listing Authority and the London Stock Exchange for the delisting of ARC’s shares.

This all-cash transaction values ARC at 16.25 pence per share, or an equity value of approximately £25.2 million (approximately $42.0 million) on a fully-diluted basis.

“Although we are declaring the offer unconditional at this point, our objective is to reach 100 percent acceptance. To date we have acquired approximately 84.68 percent of the issued share capital of ARC and continue to pursue acceptances of the offer,” said J. Daniel McCranie, Virage Logic’s executive chairman.

“This acquisition significantly expands our market opportunity to include microprocessor cores and further underscores our vision of establishing Virage Logic as a broad-line supplier of highly differentiated semiconductor IP.”

Transaction details
On August 18, 2009, Virage Logic made a recommended cash offer of 16.25 pence per share for ARC’s issued share capital. The offer is being conducted under the rules of the U.K. City Code on Takeovers and Mergers.

The purchase of ARC’s shares in the offer will be funded out of Virage Logic’s existing cash resources. At the time it commenced the Offer, Virage Logic had received irrevocable undertakings from ARC shareholders representing, in aggregate, approximately 56 percent of ARC’s issued share capital. All of these shareholders have now tendered their acceptance of the Offer.

Now that Virage Logic has acquired 84.68 percent of ARC’s outstanding shares, immediate application will be made to the UK Listing Authority for the cancellation of listing of the ARC shares on the Official List and to the London Stock Exchange for cancellation of admission to trading of the ARC shares on its market for listed securities, in each case to take effect on, or shortly after, October 14, 2009, which is 20 business days following the date of this announcement.

Virage Logic also intends to apply for the re-registration of ARC as a private limited company under the relevant provisions of the Companies Act 2006.

Furthermore, if it receives sufficient valid acceptances of the offer (being not less than 90 percent of the ARC shares), Virage Logic intends to exercise its rights under Chapter 3 of Part 28 of the Companies Act 2006 to acquire compulsorily the remaining ARC shares on the same terms as the offer.

Cowen and Company, LLC and Arbuthnot Securities Limited are acting as joint financial advisors to Virage Logic. Jefferies International Limited and Woodside Capital Partners are acting as joint financial advisors to ARC.

Virage Logic announces intent to acquire ARC International

FREMONT, USA: Virage Logic Corp. announced its intent to acquire publicly held ARC International plc, a leading provider of consumer IP to OEMs and semiconductor companies globally.

The proposed acquisition would expand Virage Logic's ability to serve the global semiconductor market by complementing its existing portfolio of physical IP and standards-based advanced interface IP with ARC's widely accepted processor IP, a necessary component for complex SoC ICs.

The proposed all-cash transaction values ARC at 16.25 pence per share, or an equity value of approximately £25.2 million ($41.0 million) on a fully-diluted basis. The Directors of ARC have recommended unanimously that ARC's shareholders accept the offer.

Virage Logic expects that the offer document will be mailed to ARC shareholders shortly. The offer period will extend for a minimum of 21 days from the date the offer document has been mailed, and the transaction is expected to close by the end of Virage Logic's first fiscal quarter of 2010, which ends on December 31, 2009.

The offer is subject to certain limited closing conditions, including that at least 90 percent of the ARC shares have been tendered into the offer.

"The acquisition of ARC would represent another significant milestone in the execution of our vision of establishing Virage Logic as a broad-line supplier of highly differentiated semiconductor IP to our global IDM, foundry and fabless customers. Through both our organic and inorganic growth initiatives, we have significantly expanded our portfolio of standard products," said Dan McCranie, Virage Logic's executive chairman.

"With approximately $24 million in revenue for the trailing 12 months ended June 30, 2009 and over 150 customers, ARC would contribute meaningful scale to our business. Furthermore, ARC would significantly expand our market opportunity to include microprocessor cores, the largest segment of the semiconductor IP market."

"In our engagements with well over 300 existing worldwide customers, we have seen the need to provide additional IP building blocks to enable successful and timely development of large SoC products," said Dr. Alex Shubat, president and CEO of Virage Logic.

"Our highly differentiated product portfolio comprising memory compilers, logic libraries, non-volatile memory, test and repair solutions, and high speed interfaces have set the standard for superior quality and value added features for a variety of end applications. By bringing ARC's talented team into our company, we will be complementing our existing technological and operational nucleus to provide even more comprehensive product solutions for our customers."

"ARC has established a leading position in the provision of customizable Solution-to-Silicon IP to consumer and semiconductor companies globally. The company has been rationalized and strengthened under its new leadership, and with its market-leading technology and outstanding worldwide customer base, ARC is well positioned for a successful future," said Richard Barfield, Chairman of ARC.

"As Virage Logic has recognized, the combination of the technology, expertise and customer bases of ARC and Virage Logic will create substantial opportunities for the Enlarged Group and its customers. In addition, the ARC Directors believe that the Offer delivers value and certainty to ARC Shareholders. Consequently, the ARC Directors are able to recommend the Offer unanimously to ARC Shareholders."

On a non-GAAP basis, which excludes the effects of FAS123R stock compensation expense, restructuring, and amortization of intangible assets and acquisition related charges, Virage Logic expects the proposed acquisition to be accretive between $0.10 and $0.14 earnings per share to fiscal year 2010. Immediately following the closing of the acquisition, Virage Logic expects to have a cash balance of approximately $20-$23 million.

Cowen and Company, LLC and Arbuthnot Securities Limited are acting as joint financial advisors to Virage Logic. Jefferies International Limited and Woodside Capital Partners are acting as joint financial advisors to ARC.